Politicians were blindsided by the decision to close the News of the World but Labour leader Ed Miliband and the justice secretary Ken Clarke urged caution in regarding any bad practice as routed.

Miliband still called for Rebekah Brooks to resign, while Ken Clarke called the move a rebranding exercise. He told the BBC: "All they're going to do is rebrand". A Conservative colleague, Nick de Bois, the MP for Enfield North, called for News International to withdraw from any bid to take over BSkyB.

The leader of the opposition, who impressed many in the Labour party when he called for Rebekah Brooks on Monday to consider her position, said on Thursday he did not want, nor think, that the newspaper needed to close. Ed Miliband told the BBC: "It's a big act but I don't think it solves the real issues."

Most people spoke of their "shock" at the revelation but a negative reaction soon started to emerge, over the newly out of work News of the World staff and suggestions the newspaper will simply rebrand itself.

Tom Watson, the Labour MP heavily involved in the campaign to expose wrongdoing at News International told Sky news: "This is a victory for decent people up and down the land, and I say good riddance to the News of the World".

But he added: "The anger will only subside when a very senior executive in this company takes responsibility for this heinous attack on British people.

"No one was going to buy this paper any more. No one was going to advertise in it. They destroyed it. The people who were hacking phones, they were the people who closed this paper.

"I feel very sorry for honest journalists who are left at the paper and I actually have a degree of sympathy for the outgoing editor Colin Myler who, I think frankly, has had to carry a heavy load for the wrongdoing of other people in the organisation."

Ed Miliband said: "One of the people who's remaining in her job is the chief executive of News International who was the editor at the time of the hacking of Milly Dowler's phone.

"What I'm interested in is not closing down newspapers, I'm interested in those who were responsible being brought to justice and those who have responsibility for the running of that newspaper taking their responsibility, and I don't think those two things have happened today."

He again insisted Brooks should go: "She should go, take responsibility."

He was supported by the former deputy prime minister John Prescott who called it a "management stunt". He said: "What he does is he gets rid of problems and in this case nobody in senior management ... none of those go but the poor old workers at the News of the World are going and there's no doubt it will become the Sunday Sun."

Tory backbencher Nick de Bois suggested News International would be advised to go further to fully kill off any bad conduct: "At last some sense of responsibility from News Corp. Now they would do well to withdraw from the acquisition, even if only temporary."